KJo wrote:
I've been following Pak closely for 15 years, but I still don't understand why we care about MFN status from Pak. Can someone tell me? Is it to do with allowing us to sell products there? Can't we do without it - why does Pak think they hold the carrot to dangle in front of us?
First to get one thing straight, MFN is something Pakistan has to do as a member of the World Trade Organization (WTO) and not as a favor to India.
http://www.wto.org/english/thewto_e/wha ... act2_e.htm
Most-favoured-nation (MFN): treating other people equally
Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.
This principle is known as most-favoured-nation (MFN) treatment (see box). It is so important that it is the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4), although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO.
Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.
So what is in it for India if Pakistan meets its WTO obligation?
To me it is a sign of seriousness. It is an encouraging sign regarding Pakistan's sincerity for peace if it doesn't let its hostility to India override its international obligations.
There is a second benefit as well. Nations trade because it is mutually beneficial. There is a model (GTAP) that models the supposed benefits of trade:
https://www.gtap.agecon.purdue.edu/models/
According to such a model, the benefits to India and Pakistan of "MFN with trade facilitation" is many times more than the annual volume of trade, which will be many tens of billions of dollars. (The benefit for India is a few trillion dollars). Since I don't understand the model and the numbers it produces, I won't say more, but just point you to the publication:
http://elibrary.worldbank.org/doi/book/ ... -9450-6483
In general, per that paper, free trade in the SAFTA region has a huge benefit.
PS: if someone can decipher the key ingredients in the GTAP model and can validate the benefits of Indo-Pak trade per that model, my appreciation in advance!
. The Paki low life filth truly have no shame. They put out a bunch of Christian victims whose church was blasted, and for whom they have no regard, just to showcase their so called "victim-hood". Ackk Thoo. Bloody diseased rodents.